REITs Becoming a Popular Form of Indirect Investment in the Real Estate Market

Private investors are generating stable profits through investment in large-sized REITs in since last year. (image: Shinhan REITs Management Co.)

SEOUL, Jun. 13 (Korea Bizwire) — Private investors in the real estate market are turning to Real Estate Investment Trusts (REITs) as the market is suffering from an overall slump following government restrictions.

SG Lab, a research arm of the South Korean real estate marketing firm MB& Holdings Co., reported that the number of REITs that include offices, residences, and hotels increased from 219 in December to 231 this month, which is a 5 percent increase in only six months.

REITs accounted for 44 trillion won (US$37.1 billion) in assets, an increase of 2 trillion won over the last six months.

The Ministry of Land, Infrastructure and Transport said that private investors are generating stable profits through investment in large-sized REITs including the Shinhan Alpha REIT and the E-REITs KOCREF listed on the stock exchange since last year.

The ministry reported that two REITs listed on the stock exchange last year maintained stable stock prices despite an overall plunge in the stock exchange, and yielded profits between 2.8 and 5.6 percentage points higher than government bonds.

“The prolonged downturn in the real estate market is leading investors to invest in REITs, which come with tax benefits and can yield stable profits without having to manage properties,” said Cho Hyun-taek, a researcher at SG Lab.

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